The Inexorable Rise of Walmart 1988-2016

Subject: Company Analysis
Pages: 2
Words: 699
Reading time:
3 min
Study level: Bachelor

Walmart’s sales grew from $16 billion in 1987 to $165 billion in 1999. Walmart’s main competitive advantages during that period.

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Walmart is a multibillion-dollar retail conglomerate with operations in twenty-eight nations. From 1988 to 2016, Walmart maintained a competitive edge in its business by offering a wide variety of items at low prices compared to its counterparts. Walmart maintains its economic edge by maintaining profitable business partnerships with their global network of vendors, which allows them to buy commodities at low rates, which they then pass on to their clients. Another source of competitive advantage is their substantial global business, which encompasses over 11,700 stores worldwide, attracting millions of loyal customers. Walmart has retained a 70-80 percent market share in their locations due to their innovative business practices, responding to market needs, and diversity.

Walmart entered several international markets and has, in general, been less successful internationally than in the U.S. Moreover, Walmart pulled out of two markets – Germany and South Korea. Aspects of Walmart’s strategy which translates well to international markets.

While Walmart’s global expansion efforts were mainly prosperous, the business stumbled into severe problems in Germany and South Korea, exiting the nations barely a decade after its initial arrival. However, the efficacy of these establishments had been pitifully ineffective. Among the fundamental reasons for its inability to reach the market are two significant causes. The threat to domestic firms and the government’s FDI policy prevent foreign corporations from opening multi-brand shopping facilities in the countries. However, Walmart’s Everyday Low Price (EDLP) approach, which is at the heart of the company’s strategy, works well in foreign markets. The stores operated on extremely high margins, assuring huge profits even when sales volumes were low. On the other hand, Walmart predicted reduced profit margins, needing more sales volume and cost-cutting measures. Customers are less likely to take advantage of special deals due to daily low prices, making them more loyal. This aspect translates to more constant cash flows, higher sales, and higher profitability for the company. In addition to its pricing strategy, Walmart offers the convenience of one-stop shopping. The company sells a variety of goods, including food, clothing, and video games. This aspect has been proven by Walmart’s development and growth strategy, both within and beyond the United States. Because of its Always Low Prices strategy, it has always dominated the retail business in several countries.

Numerous constraints, such as culture, competitiveness, distribution network, and Amazon’s competitors, hampered the company’s success in Germany and Korea. They shopped in totally different ways than their American counterparts. Americans, for example, like to buy in bulk for long-term storage and are accustomed to packaged meals. Korean shoppers, on the other hand, are more concerned with food quality. They are willing to frequent grocery stores, neighbourhood businesses, and local wet marketplaces to acquire modest quantities of fresh food. E-commerce companies took advantage of this client proclivity by giving considerable discounts for fair transactions. On the other hand, Walmart became a retailer to which Koreans flocked when they needed big non-food items and wanted to see a variety of commodities, including overseas goods. They prefer to buy at local and domestic grocery stores for food and everyday items.

Over the past 10 years, one of Walmart’s main U.S. competitors has been Amazon. Competitive advantages ehich does Walmart have over Amazon.

In terms of physical locations, Walmart has a considerable advantage over Amazon. Looking at the U.S. market, Walmart’s locations are very close to most customers across the country, and these stores provide many of the same items available on Amazon. Furthermore, Walmart has chosen to slow the rate at which it builds new stores to invest in new technologies that will increase the efficiency of its supply chain system. Because of the economies of scale it achieves, its long-run typical operations costs are lower to maintain its corporate reputation as the world’s largest retailer. Walmart’s distribution network organization strategy has provided several long-term competitive advantages, including lower product expenses, cheaper stock finance costs, expanded in-store assortment and variety, and exceptionally aggressive client pricing. Walmart consequently has a significant, long-term competitive advantage in a brutally competitive market based on the lowest-cost, one-stop-shop operational approach.

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